1. What Are HMRC Approved Salary Sacrifice Schemes?

HMRC Approved Salary Sacrifice Schemes allow employees to exchange part of their salary for non-cash benefits, typically resulting in lower income tax and National Insurance contributions for both employee and employer.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Gross Salary — Total salary before any deductions
• Sacrifice — Amount sacrificed for benefits
• Income Tax — Calculated on reduced salary
• National Insurance — Calculated on reduced salary

Explanation: The scheme reduces your taxable income, potentially placing you in a lower tax bracket and reducing your National Insurance contributions.

3. Benefits of Salary Sacrifice

Details: Common benefits include pension contributions, childcare vouchers, cycle-to-work schemes, and ultra-low emission vehicles. These can provide significant tax savings while offering valuable benefits.

4. Using the Calculator

Tips: Enter your gross salary, the amount you wish to sacrifice, and your estimated income tax and National Insurance contributions. The calculator will show your net take-home pay after these deductions.

5. Frequently Asked Questions (FAQ)

Q1: What benefits can I get through salary sacrifice?
A: Common options include pension contributions, childcare vouchers, cycle-to-work schemes, and company cars with CO2 emissions ≤75g/km.

Q2: Will salary sacrifice affect my pension?
A: It may reduce your qualifying earnings for auto-enrolment pensions. Ensure your pension contributions remain sufficient.

Q3: Are there minimum wage considerations?
A: Yes, your reduced salary cannot take you below the National Minimum Wage after sacrifice.

Q4: Can I opt out of salary sacrifice?
A: Typically yes, but this may be restricted to certain times of year or life events (e.g., marriage, birth of child).

Q5: Are all benefits tax-free?
A: No, some benefits may still be taxable. Pension contributions are generally tax-free, while company cars may have Benefit-in-Kind tax.